UK inflation has fallen from its peak and is currently at 3.4%. When is the next Consumer Price Index (CPI) report, and will inflation continue to slow down?
The rate of inflation in the UK over the last three years has been the highest in a generation, peaking at 11.1% in October 2022.
This prompted an aggressive policy reaction from the Bank of England, which raised interest rates fourteen times to their current level of 5.25%. Inflation has dropped from this peak and price increases have seen a slowdown – and in his Spring Budget on 6 March, Jeremy Hunt expressed optimism that inflation will fall further in the coming months.
The Office for Budget Responsibility (OBR), which released its economic forecasts shortly after Hunt’s Budget, expects inflation to average out at 2.2% in 2024. It is currently at 3.4%, according to the CPI figures released on 20 March.
Some analysts now believe that the Bank of England could start cutting rates at its Monetary Policy Committee meeting in June. See our article on when the Bank of England’s MPC is next meeting.
Of course, any forecasts from analysts could change quickly if the data doesn’t play ball. The Bank of England will want to see prices come down further before taking any action – even if higher interest rates are starting to have a painful effect on UK economic growth and the labour market.